Page 344 - Orlicky's Material Requirements Planning

CHAPTER 19 Repetitive Manufacturing Application 323

BACKFLUSH

This postdeduction records the component parts used in an assembly or subassembly by
exploding the BOMs by the production count of assemblies produced. In the low-vol-
ume, high-variety production process (job shop), a work order is used to collect the job
costs for material and labor. Since repetitive manufacturing usually determines individ-
ual product cost by collecting direct costs over time and dividing them by the number of
units completed, the work-order transactions specific to an individual part or group of
parts are not necessary. In addition, since the BOMs are stable in a repetitive industry and
the product cannot be released to the line without availability of all the parts, the detailed
tracking of material to a work order is not needed. This is why the process of backflush-
ing is used to deduct components based on the number of finished goods completed.
If 200 lamps were produced, then 200 bulbs, 200 yokes, 200 bases, 200 shades, and
200 electrical cords had to have been used. Only exceptions to the BOM need to be man-
aged and reported to the system. These exceptions could be parts that are scrapped,
rejected, destroyed, substituted, or otherwise different from the BOM. Having a good
process for capturing and reporting these exceptions is essential to having an effective
backflush. Attempting to implement backflushing with significant errors in the BOMs or
inventory is inviting disaster. Effective inventory control is not possible, and the infor-
mation used by the ordering process will be incorrect. This incorrect information likely
will result in shortages to the line that will quickly shut down the whole operation.
Backflushing may look very easy, and theoretically, as a process, it really is. With one
transaction, the finished-good part is received into inventory, and all components are
relieved. This almost looks like “automagic.” However, without good control of excep-
tional usage or inaccuracy in the BOM, this magic can become a nightmare.
A more advanced process of backflushing is called pay-point backflushing. Pay-point
or count-point backflushing is used when the manufacturing process extends for more
than one day. Documenting material movements with transactions more than one day
apart makes controlling inventory very difficult. Daily cycle counts must take into
account the inventory that is on the line semi-completed and not yet transacted. This
problem does not exist in the job shop because all materials are transacted at the begin-
ning of the order when the material is issued from stock.
Product 136593 Widget
142604 Component A Routing step 10
142496 Component B Routing step 10
148375 Component C Routing step 20
193857 Component D Routing step 30
103857 Component E Routing step 50
For this product, if routing step 10 is considered a count point (pay point), a trans-
action would be done that would complete that operation, and the two parts, 142604 and
142496, would be consumed from the line inventory and moved to work-in-process. The